EXHIBIT 5(j)
SUB-ADVISORY AGREEMENT
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AGREEMENT made this 2nd day of March 1998, between First Tennessee Bank National
Association (herein called the "Investment Adviser") and Xxxxxx & Company, Inc.,
a Tennessee corporation (herein called the "Sub-Adviser").
WHEREAS, the Investment Adviser is the investment adviser to First Funds, a
business trust organized under the laws of Massachusetts (herein called the
"Trust"), a registered open-end investment company registered under the
Investment Company Act of 1940, as amended (the "1940 Act") consisting of one or
more series of shares, each having its own investment policies; and
WHEREAS, the Sub-Adviser is an investment adviser under the Investment
Advisers Act of 1940; and
WHEREAS, the Investment Adviser wishes to retain the Sub-Adviser to provide
investment advisory services in connection with the Trust's Tennessee Tax-Free
Portfolio (herein called the "Portfolio") a series of the Trust; and
WHEREAS , the Sub-Adviser is willing to provide such services to the
Investment Adviser upon the conditions and for the compensation set forth below;
NOW, THEREFORE, each party agrees as follows:
1. Appointment. (a) The Investment Adviser hereby appoints the Sub-
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Adviser its sub-adviser with respect to the Portfolio, as permitted in the
Investment Advisory and Management Agreement between the Investment Adviser and
the Trust dated October 25, 1995 (such Agreement or the most recent successor
advisory agreement between such parties is herein called the "Advisory
Agreement"). The Sub-Adviser accepts such appointment and agrees to use its best
professional judgment to make timely investment decisions for the Portfolio with
respect to the investments of the Portfolio in accordance with the provisions of
this Agreement for the compensation herein provided.
(b) The Sub-Adviser shall for all purposes herein be deemed to be an
independent contractor and shall, except as expressly provided or authorized
(whether herein or otherwise), have no authority to act for or represent the
Trust or the Investment Adviser in any way or otherwise be deemed an agent of
the Trust or the Investment Adviser.
2. Delivery of Documents. (a) The Investment Adviser shall provide to
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the Sub-Adviser copies of the Trust's most recent prospectus and statement of
additional information (as each may be amended or supplemented from time to
time) which relate to any class of shares representing interests in the
Portfolio (each such prospectus and statement of additional information as
presently in effect, and as they shall from time to time be amended and
supplemented, is herein respectively called a "Prospectus" and a "Statement of
Additional Information").
(b) The Sub-Adviser will make available and provide to the Investment
Adviser such financial accounting, and statistical information related to its
duties and responsibilities hereunder as is necessary for the preparation of
registration statements, reports, and other documents required by federal and
state securities laws and such other information as the Trust's Board of
Trustees (herein called the "Trustees") or the Investment Adviser may reasonably
request for use by the Trust and its distributor for the underwriting and
distribution of the Portfolio shares.
3. Sub-Advisory Services to the Portfolio. Subject to the supervision of
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the Investment Adviser, the Sub-Adviser will supervise the day-to-day operations
of such portion of the Portfolio's assets as the Investment Adviser shall assign
to the Sub-Adviser and perform the following services with respect to such
portion of assets: (i) provide investment research and credit analysis
concerning the Portfolio's investments, (ii) conduct a continual program of
investment of the Portfolio's assets, (iii) place orders in accordance with
paragraphs 4 to 7 hereof for all purchases and sales of the investments made for
the Portfolio, and (iv) maintain the books and records required in connection
with its duties hereunder. In addition, the Sub-Adviser will keep the Investment
Adviser informed of developments materially affecting the Trust or the
Portfolio. The Sub-Adviser will communicate to the Investment Adviser on each
day that a purchase or sale of a security is effected for the Portfolio (i) the
name of the issuer, (ii) the amount of the purchase or sale, (iii) the name of
the broker, dealer, bank or other person (herein called "Brokers), if any,
through which the purchase or sale will be effected (iv) the CUSIP number of the
security, if any, (v) the Portfolio to which such purchase or sale pertains, and
(vi) such other information as the Investment Adviser may reasonably require for
purposes of fulfilling its obligations to the Trust under the Advisory
Agreement. The Sub-Adviser will render to the Trustees such periodic and special
reports as the Investment Adviser or the Trustees may reasonably request,
including, if applicable, regular reports of the total brokerage business placed
by it and the manner in which the allocation of such brokerage business has been
accomplished. The Sub-Adviser will provide the services rendered by it hereunder
in accordance with the Portfolio's investment objectives, policies, and
restrictions as stated in its current Prospectus and Statement of Additional
Information. Except for instructions or advice given to the Sub-Adviser by the
Investment Adviser, the Investment Adviser shall not be responsible or liable
for the investment merits of any decision by the Sub-Adviser to purchase, hold
or sell a security for the Portfolio.
4. Brokerage: The Sub-Adviser may place orders pursuant to its investment
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determinations for the Portfolio either directly with the issuer or with any
Brokers. In placing orders, the Sub-Adviser will consider the experience and
skill of the firm's securities traders as well as the firm's financial
responsibility and administrative efficiency. The Sub-Adviser will attempt to
obtain the best price and the most favorable execution of its orders. Consistent
with these obligations, the Sub-Adviser may, subject to the approval of the
Trustees, select Brokers on the basis of the research, statistical, and pricing
services they provide to the Portfolio. A commission paid to such Brokers may be
higher than that which another qualified broker would
have charged for effecting the same transaction, provided that the Sub-Adviser
determines in good faith that such commission is reasonable in terms either of
the transaction or the overall responsibility of the Sub-Adviser to the
Portfolio and its other clients and that the total commissions paid by the
Portfolio will be reasonable in relation to the benefits to the Portfolio over
the long term. In no instance will Portfolio securities be purchased from or
sold to the Trust's principal underwriter, the Investment Adviser, the Sub-
Adviser, or any affiliate (as defined in the 0000 Xxx) thereof, except to the
extent permitted by SEC exemptive order or by applicable law. The Investment
Adviser agrees to provide the Sub-Adviser a list of Brokers which are
"affiliated persons" (as defined in the 0000 Xxx) of the Trust and the
Investment Adviser. The Sub-Adviser agrees to furnish to the Investment Adviser
and to the Trust a list of Brokers and dealers which are such "affiliated
persons" of the Sub-Adviser. It is understood that neither the Investment
Adviser nor the Sub-Adviser has adopted a formula for selection of Brokers for
the execution of the Portfolios investment transactions.
5. Transaction Procedures. All investment transactions on behalf of the
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Portfolio will be consummated by payment to or delivery by the duly appointed
custodian for the Portfolio (the "Custodian") , or such depositories or agents
duly appointed by the Trustees and as may be designated by the Custodian in
writing, as custodian for the Portfolio, of all cash and/or securities due to or
from the Portfolio, and the Sub-Adviser shall not have possession or custody
thereof or any responsibility or liability with respect thereto. The Sub-
Adviser in effecting transactions on behalf of the Portfolio shall advise the
Custodian of all investment orders for the Portfolio placed by it with Brokers.
The Investment Adviser shall issue, or cause to be issued, to the Custodian such
instructions as may be appropriate in connection with the settlement of any
transaction initiated by the Sub-Adviser. The Portfolio is responsible for all
custodial arrangements and the payment of all custodial charges and fees, and,
upon the giving of proper instructions to the Custodian, the Sub-Adviser shall
have no responsibility or liability with respect to custodial arrangements or
the acts, omissions or other conduct of the Custodian, except that it shall be
the responsibility of the Sub-Adviser to take appropriate action if the
Custodian fails properly to confirm execution of the instructions to the Sub-
Adviser in a written form duly agreed upon by the Custodian and the Sub-Adviser.
6. Compliance with Laws; Confidentiality. (a) The Sub-Adviser agrees that
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it will comply with all applicable rules and regulations of all federal and
state regulatory agencies having jurisdiction over the Sub-Adviser in
performance of its duties hereunder (herein called the "Rules"). The Sub-Adviser
will treat confidentially and as proprietary information of the Trust all
records and information relative to the Trust and prior, present or potential
shareholders, and will not use such records and information for any purpose
other than performance of its responsibilities and duties hereunder, except
after prior notification to and approval in writing by the Investment Adviser
and the Trust, which approval shall not be unreasonably withheld and may not be
withheld where the Sub-Adviser may be exposed to civil or criminal contempt
proceedings for failure to comply, when required to divulge such information by
duly constituted authorities, or when so requested by the Trust.
(b) The Sub-Adviser is not authorized by the Trust or the Investment
Adviser to take any action, including the purchase or sale of securities for the
account of the Portfolio, (a) in contravention of (i) any investment
restrictions set forth in the 1940 Act and the rules thereunder; (ii) specific
written instructions adopted by the Trustees or the Investment Adviser and
communicated to the Sub-Adviser; or (iii) the investment objectives, policies,
and restrictions of the Portfolio as set forth in the Trust's registration
statement as amended from time to time, or (b) which would have the effect of
causing the Trust to fail to qualify or to cease to qualify as a regulated
investment company under the Internal Revenue Code of 1986, as amended, or any
succeeding statute.
(c) The Sub-Adviser agrees with respect to the services provided to the
Portfolio that it:
i) will conform with all applicable rules and regulations of the
Securities and Exchange Commission ("SEC");
ii) will not purchase shares of the Portfolio for its own investment
account; and
iii) will immediately notify the Trust and the Investment Adviser of the
occurrence of any event which would disqualify the Sub-Adviser from serving
as investment adviser of an investment company.
7. Control by Trust's Board of Trustees. Any recommendations concerning
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the Portfolio's investment program proposed by the Sub-Adviser to the Portfolio
and to the Investment Adviser pursuant to this Agreement, as well as any other
activities undertaken by the Sub-Adviser on behalf of the Portfolio pursuant
hereto, shall at all times be subject to any applicable directives of the Board
of Trustees of the Trust.
8. Services Not Exclusive. The Sub-Adviser's services hereunder are not
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deemed to be exclusive, and the Sub-Adviser shall be free to render similar
services to others so long as its services under this Agreement are not impaired
thereby.
9. Books and Records. In compliance with the requirements of Rule 3la-3
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of the Rules, the Sub-Adviser hereby agrees that all records which it maintains
for the Trust are the property of the Trust and further agrees to surrender
promptly to the Trust and the Investment Adviser any such records upon the
request of the Trust or the Investment Adviser. The Sub-Adviser further agrees
to preserve for the periods prescribed by Rule 3la-2, the records required to be
maintained by the Sub-Adviser hereunder pursuant to Rule 3la-1 of the Rules.
10. Expenses. During the term of this Agreement, the Sub-Adviser will
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bear all expenses in connection with the performance of its services under this
Agreement. The Sub- Adviser shall not bear certain other expenses related to
the operation of the Trust including, but not limited to: taxes levied against
the Trust, the Portfolio or the Investment Adviser; interest;
brokerage fees and commissions in connection with the purchase and sale of
portfolio securities for the Portfolio; and any extraordinary expense items.
11. Compensation. (a) For the services provided and the expenses assumed
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pursuant to this Agreement, the Investment Adviser shall pay the Sub-Adviser,
and the Sub-Adviser agrees to accept as full compensation therefor, a sub-
advisory fee payable as soon as practicable after the last day of each month,
calculated using an annual rate of 0.30% (the "Annual Rate").
(b) The monthly sub-advisory fee to be paid by the Investment Adviser
to the Sub-Adviser shall be determined as of the close of business on the last
business day of each month by multiplying one-twelfth of the Annual Rate by the
Average Portfolio Net Assets (hereinafter defined) calculated monthly as of such
day.
(c) For the purposes of this paragraph, the "Average Portfolio Net
Assets" shall be calculated monthly as of the last business day of each month
and shall mean the sum of the net assets of the Portfolio calculated each
business day during the month divided by the number of business days in the
month (such net assets to be determined as of the close of business each
business day and computed in the manner set forth in the Declaration of Trust of
the Trust).
12. Limitation on Liability. (a) The Sub-Adviser will not be liable for
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any error or judgment or mistake of law or for any loss suffered by the
Investment Adviser, the Portfolio or the Trust in connection with the matters to
which this Agreement relates, except that the Sub-Adviser shall be liable to the
Investment Adviser, the Portfolio or the Trust for a loss resulting from a
breach of fiduciary duty with respect to the receipt of compensation for
services or a loss resulting from willful misfeasance, bad faith or gross
negligence on the Sub-Adviser's part in the performance of its duties or
reckless disregard by it of its obligations or duties under this Agreement.
(b) The Sub-Adviser shall indemnify and hold harmless the Trust, the
Portfolio, and the Investment Adviser from any loss, cost, expense or damage
resulting from the failure of the descriptive information furnished by the Sub-
Adviser to be accurate in all material respects at the time provided or the
failure of the Sub-Adviser to comply in all material respects with the
investment objectives and policies and restrictions as set forth in the Trust's
registration statements as amended from time to time.
13. Duration, Renewal, Amendment, and Termination. (a) This Agreement
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shall become effective on the date first written above and shall remain in force
for a period of two (2) years from such date, and from year to year thereafter
but only so long as such continuance is specifically approved at least annually
by the Investment Adviser, and (i) by the vote of a majority of the Trustees who
are not interested persons of the Investment Adviser or the Sub-Adviser, cast in
person at a meeting called for the purpose of voting on such approval and by a
vote of the Trustees or (ii) by the vote of a majority of the outstanding voting
securities of the Portfolio. The aforesaid provision that this Agreement may be
continued "annually" shall be construed in a manner consistent with the 1940 Act
and the rules and regulations
thereunder.
(b) This Agreement may be amended at any time, but only by written
agreement between the Investment Adviser and the Sub-Adviser, which amendment is
subject to the approval of the Trustees and the shareholders of the Trust in the
manner required by the 1940 Act, subject to any applicable exemptive order of
the SEC modifying the provisions of the 1940 Act with respect to approval of
amendments of this Agreement.
(c) This Agreement: (i) may at any time be terminated without the
payment of any penalty either by vote of the Trustees or by vote of a majority
of the outstanding voting securities of the Portfolio, on sixty (60) days'
written notice to the Sub-Adviser, (ii) shall immediately terminate in the event
of its assignment; and (iii) may be terminated by the Sub-Adviser on sixty (60)
days' written notice to the Investment Adviser and by the Investment Adviser on
sixty (60) days' written notice to the Sub-Adviser.
(d) As used in this Section 12, the terms "assignment," "interested
person," and "vote of a majority of the outstanding voting securities" shall
have the meanings set forth in the 1940 Act and the rules and regulations
thereunder, subject to any applicable orders of exemption issued by the SEC.
(e) All notices, requests, demands or other communications hereunder
shall be in writing and shall be deemed given, if delivered personally, on the
day delivered or if mailed by certified or registered mail, postage prepaid,
return receipt requested, three (3) days after placement in the United States
mail, to the addresses below:
If to Investment Adviser:
C. Xxxxxxx Xxxxx, III
c/o First Tennessee Bank National Association
0000 Xxxxxx Xxxxxx, Xxxxx Xxxxx
Xxxxxxx, XX 00000
If to Sub-Adviser:
A. Xxxxx Xxxxxx, President
Xxxxxx & Company, Inc.
Xxx Xxxxxx Xxxxxx, Xxxxx 000
000 Xxxxx Xxx Xx.
Xxxxxxxxx, XX 00000
If to Trust:
c/o Xxxxx X. Xxxxx, Esq.
ALPS Mutual Funds Services, Inc.
000 00xx Xx., Xxxxx 0000
Xxxxxx, XX 00000
14. Limitation on Liability. The Sub-Adviser is hereby expressly put on
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notice of the limitation of shareholder liability as set forth in the
Declaration of Trust and agrees that obligations assumed by the Portfolio
pursuant to this Agreement shall be limited in all cases to
the Portfolio and its assets. Sub-Adviser agrees that it shall not seek
satisfaction of any such obligation from the shareholders or any individual
shareholder of the Portfolio, nor from the Trustees or any individual Trustee of
the Portfolio.
15. Miscellaneous. The captions in this Agreement are included for
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convenience of reference only and in no way define or delimit any provisions
hereof or otherwise affect their construction or effect. If any provision of
this Agreement shall be held or made invalid by a court decision, statute, rule
or otherwise, the remainder of this agreement shall not be affected thereby.
This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors. To the extent that state law
has not been preempted by the provisions of any law of the United States
heretofore or hereafter enacted, as the same may be amended from time to time,
this Agreement shall be administered, construed, and enforced according to the
laws of the State of Tennessee without giving effect to the choice of laws
provisions thereof.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their duly authorized officers designated below as of the day and
year first above-written.
FIRST TENNESSEE BANK NATIONAL ASSOCIATION
By:___________________________________
Name: C. Xxxxxxx Xxxxx, III
Title: Senior Vice President
XXXXXX & COMPANY, INC.
By:___________________________________
Name: A. Xxxxx Xxxxxx
Title: President
